How to Invest in Property at a Young Age

Invest In Property at a Young Age

Property Investment Tips

Investing in property has been thought of as only accessible to Baby Boomers and people from wealthy families.  Many young property investors are trying to break into the market but find it difficult with little savings, no credit history and the stresses of university or a first job. It can be a bit more work for young people to secure a home loan, but with effort and dedication, it is possible.

Gaining a thorough knowledge of all aspects involved in property investing is crucial for young and mature investors alike.

Educate Yourself

Perhaps the most essential factor when looking to become a property investor is educating yourself on all aspects involved. There is no need to seek out property gurus for seminars but do look to speak with anyone with experience. There are many online groups where property investors share ideas and give advice on the pitfalls. Books by credible investors are also a goldmine of knowledge you can leverage. Podcasts have become a popular source of useful information and can be accessed for little cost online.

In-depth knowledge of the following areas is essential for property investors:

  • Borrowing
  • Equity
  • Property Types
  • Laws and landlord regulations

There are endless resources available to educate yourself and should be your first step of embarking on a career in the property market.

Saving Money

The most challenging area for any young investor is getting money saved to start making money. When you are looking to secure a home loan, it is advisable to try and have a sizable deposit. Initial deposits will be 20% of the property value so having more than $60,000 will give you a good starting point to purchase an excellent rental property.

Saving money does not need to be a chore, it should be treated as a typical monthly bill to be paid. Getting in the habit of saving early in life will be a bonus when you start to run a business or invest.

Creating a positive financial history of saving money regularly will also improve your credit records and give you better loan deals when speaking to lenders.

Estimate Your Borrowing Power

Gaining an understanding of how lenders will estimate your borrowing power will give you a much clearer idea of how much you can borrow and how you can improve it. Your borrowing power is determined not just on your monthly salary, but it takes into consideration all of your financial commitments and obligations.

Investors with deposits of less than 20% will have less borrowing power but through mortgage insurance can still be accepted for a loan. With a quick internet search, you will soon come across numerous free online calculators offered by lenders and banking institutions. Among other things, you can use these to check how much mortgage insurance you need to pay. Keeping your monthly bills to a minimum and your savings account healthy will increase your borrowing power, enabling you to get better rates or more substantial loan amounts.

Review Lenders

There are many comparison websites you can view lenders rates through, but a thorough investigation of any lenders you look to seek a loan from is essential. Do not get sucked into tasty teaser interest rates as you may find after the teaser period the monthly repayments are too much.

For those looking to buy to let you will find rates may be a little higher, or a larger initial deposit is required. There are specialist brokers who cater for those looking to buy to rent, and they will give you good advice and have contacts with many major banks. Regardless of the bank you opt for, check all customer comments and complaints to make sure they are easy to work with and have had no issues.

Getting the best interest rates are crucial to becoming a profitable property investor. Take the time to research all the banks and never be rushed into a deal.

Seek Pre-approval

For those unsure what it is, pre-approved loans are when a bank has already confirmed the amount you can borrow with no need for them to view the property. A customer can benefit from having a loan pre-approved as it lets them know exactly what they can borrow, the money gets distributed faster once the property deal is closed, give you negotiating power, and you have a full understanding of your finances before purchasing a house.

Pre-approved loans are fantastic for young or first-time buyers as it lets any estate agent know you are a ready-to-spend customer and have finances in place to make the deal go smoothly.

Property Type, Condition and Location

Any property investor wants to ensure that their property is desirable to keep the tenancy and rental as high as possible. For a family sized home you should look to be in a good school area with amenities nearby like shops, restaurants with excellent transport links. Single occupancy apartments will be a favorite in cities or near universities.

Take care to check any property for future work that will be required, bathrooms and kitchens cost the most to replace, so factor this in when making an offer. Primary maintenance jobs on a home include boiler fitting, electrical rewiring, new roof, and plumbing. Getting these checked out before making an offer is advisable. The cost of maintaining a house should be taken into account before buying.

Start investing

There are endless opportunities for those looking to become a property investor. The key take away for anyone looking to enter the market is research. Every aspect needs thorough inspection as you will be entering into a 25 years (or longer) loan agreement so getting all the facts correct is essential.

Investing in property has been a robust steady market for decades, fluctuations do happen but over time prices always rise. The world is getting more populated, and the demand for homes will always increase which can give any homeowner confidence that their investment is solid.

The real estate market is in good shape, there are plenty of loan options available, and all the tools and advice you need is out there to start your property portfolio today to reap the benefits that many have done so already.

About Archi 51 Articles
Archi is an independent finance and investment advisor since 4 years and recently added with Investment Pedia. User are welcome to put questions on her contributions.

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